AgDevCo and KfW have appointed Barak Fund Management Limited as the new manager of LAFCo, a working capital facility dedicated to agricultural SMEs in Sub-Saharan Africa.

Barak is an alternative investment fund manager which has grown its presence in Africa significantly since the launch of its flagship fund in 2009.

LAFCo will become the third dedicated impact finance fund managed by Barak. LAFCo has been operating for the past three years, making 13 loans to agribusinesses and reaching over 129 thousand smallholder farmers over that period.

LAFCo addresses the lack of working capital and trade finance facilities for smaller companies, in particular for those operating in local and regional value chains.

LAFCo loans are between $0.5 and $3 million in size, with the opportunity to syndicate for larger facilities. LAFCo is able to offer local currency loans in some countries.

Lars Zimmermann, Principal Project Manager of KfW, the German development bank, said: 'With Barak, we have a very experienced fund manager to take LAFCo into its next phase. At a time when there is volatility in trade finance markets, the need for a dedicated agricultural facility for African SMEs is greater than ever.'

'Banks are still not providing enough or the right type of working capital to smaller companies in the agriculture sector,' said Chris Isaac, Managing Director of AgDevCo. 'We launched LAFCo to fill that gap with financing products that are designed to suit the specific needs of agricultural SMEs.'

Prieur du Plessis, the Chief Investment Officer of Barak said: 'We see multiple opportunities across Africa to improve the availability of trade finance for SMEs that engage with smallholder producers. Barak combines a disciplined approach to managing our investors' funds with a commitment to delivering lasting positive impact in the communities we serve.'

'By demonstrating what type of products work best for SMEs, we hope to encourage other lenders into the agriculture sector, where the level of unmet demand today is very large,' added Jenny Scharrer, member of the LAFCo board of directors.

LAFCo currently has funding of $20m from AgDevCo and KfW, with the aim of growing the size of the facility above $50m in the next few years as other investors come on board.